REG - Rainbow Rare Earths - Phalaborwa Update

Rainbow Rare EarthsAnnouncement

18/09/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240918:nRSR5874Ea&default-theme=true

RNS Number : 5874E  Rainbow Rare Earths Limited  18 September 2024

 

18 September 2024

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

 

Update on the Phalaborwa project in South Africa

·    Piloting campaign has confirmed Rainbow's innovative process, paving
the way for the first commercial recovery of rare earths from phosphogypsum.

·   Primary front-end leach plant flowsheet to produce a high grade rare
earth feed stream has been subject to extensive testwork and piloting,
delivering an optimised and simplified process flowsheet with a smaller
footprint, with expected Capex and Opex efficiencies.

·    Successful delivery of neodymium and praseodymium (together "Nd/Pr")
of ca. 96% purity so far in the back-end separation pilot plant; this is
confirmed by market participants as a saleable product at a normal market
impurity discount. Rainbow team continues to optimise the process to achieve
the expected oxide purity of +99%.

·    The ongoing separation work places the timing to deliver the
Definitive Feasibility Study ("DFS") in H1 2025 at risk, recognising that the
most important objective is to deliver the optimal flowsheet for the project's
long-term success; guidance for DFS completion is updated to full year 2025.

·    Offtake discussions have commenced with organisations looking to
secure a strategic and ethical source of the rare earths critical to the green
energy transition.

·    Longer-term, the honing of this technology will allow Rainbow to
access a much larger addressable market in order to develop a long-term,
scalable and sustainable business.

· Further technical information on the flowsheet testwork and optimisations
is available at https://www.rainbowrareearths.com/project/phalaborwa/
(https://www.rainbowrareearths.com/project/phalaborwa/) as well as in an
updated presentation which is available at
https://www.rainbowrareearths.com/investors/results-reports-presentations/
(https://www.rainbowrareearths.com/investors/results-reports-presentations/) .

NEWS RELEASE

Rainbow Rare Earths is pleased to announce an update on the Phalaborwa project
in South Africa. Further to the piloting campaigns carried out to date,
Phalaborwa has now produced its first magnet rare earth elements ("REE") in a
saleable form, paving the way for the first commercial recovery of REE from
phosphogypsum.

George Bennett, CEO of Rainbow, commented: "I am very proud of our team's
extensive and hard work to establish and optimise the primary front-end leach
flowsheet at Phalaborwa, which has delivered a simplified process to recover
REE from phosphogypsum versus that published in our Preliminary Economic
Assessment ("PEA"). While we have now achieved two saleable products, being a
mixed rare earth carbonate and separated Nd/Pr oxide of +96% purity, we will
continue to optimise our process to achieve our target of +99% purity.

The supply chain for REE is subject to excessive vulnerabilities due to the
dominance of China, who are increasingly demonstrating their ability to
restrict access to speciality metals. The geopolitical risks have never been
greater and we foresee that Phalaborwa can play an important part in the
development of an independent and ethical supply chain of all four critical
magnet REE.

Longer term, we expect that our innovative processing technology can be
applied to a much larger addressable market and we are currently evaluating
approaches for strategic partnership opportunities in Saudi Arabia, Canada and
India, along with our MoU signed with the Mosaic Company ("Mosaic") for the
Uberaba project in Brazil and the partnership with OCP S.A. ("OCP") and
Mohammed VI Polytechnic University ("UM6P") in Morocco."

Primary Flowsheet

The primary leach flowsheet represents +/−75% of the Phalaborwa flowsheet
and processes phosphogypsum to produce a high grade rare earth feed stream for
the separation process.

The leach flowsheet as published in the project PEA in October 2022
incorporated a number of important processes including phosphogypsum washing,
multiple stages of acid leaching, fluoride removal via continuous ion exchange
("CIX"), rare earth precipitation, a sulphuric acid agitated bake and water
leach to produce a high-grade REE stream for separation.

The leach flowsheet has been subject to an extensive programme of bench scale
and pilot plant leach test work conducted at the Johannesburg facilities of
the Council for Mineral Technology ("Mintek"), aimed at supporting the DFS for
the project. This work has confirmed the efficacy of a much simpler flowsheet,
which maintains the overall recovery rate of rare earths at ca. 66%, paving
the way for the first commercial recovery of magnet REE from phosphogypsum.
The diagram below shows the original flowsheet adopted for the PEA, with the
coloured blocks representing the processes and circuits that have now been
eliminated.

The extended test work has allowed for the identification and action of
multiple optimisation opportunities.  The end result of these efficiency
measures is the delivery of a simplified leach flowsheet with a smaller
footprint, with expected capital and operating cost benefits versus the PEA
flowsheet, which already showed strong economic returns across the rare earth
price cycle.  This bodes well for the updated economics of the revised
flowsheet to be published in the Interim Report before the end of 2024.

Rare Earth Oxide Separation Flowsheet

The final separation flowsheet represents +/−25% of the Phalaborwa flowsheet
and refines the mixed rare earth feed stream into separated rare earth oxides.
This flowsheet has been tested via a combination of bench scale ion
exchange/ion chromatography ("IX/IC") and pilot plant CIX /continuous ion
chromatography ("CIC") at the facilities of K-Technologies, Inc. in Florida,
USA.

As previously announced, the separation pilot plant has to date achieved proof
of concept with the CIC delivering a separated NdPr oxide with ca. 96% purity.
Market enquiries show that this is a saleable product, with a normal impurity
discount as seen in other metals. Rainbow's team is continuing work to
optimise the process to achieve oxide purity of +99%, with the Dy and Tb
oxides to follow.

A review of the waste/recirculating streams from the CIX/CIC test work has
shown that the leach and separation processes need to be integrated on the
same site to allow for the recycle of critical streams from the separation
process to the appropriate destinations in the leach plant and relevant
disposal of waste material. This has resulted in the decision to advance the
relocation timing of the CIX/CIC pilot plant to South Africa, with the added
benefit that the separation work can be the full focus of Rainbow's technical
team, which has already delivered excellent results on the optimisation and
finalisation of the primary flowsheet.

Complementary bench scale IX/IC tests have commenced in South Africa aimed at
achieving +99% purity while the pilot plant is shipped.

Next Steps

The various workstreams required as part of Phalaborwa's DFS are well
advanced, but completion of the final DFS is dependent on the finalisation of
the separation testwork for the project.  This does place the timetable to
complete the DFS in H1 2025 at risk and the Company is therefore updating its
guidance to complete the DFS during full year 2025, recognising that the most
important objective is to deliver the optimal flowsheet to ensure the
long-term success and sustainability of the project.

The Interim Report to be announced in Q4 2024 will update the economics of the
Phalaborwa project reflecting the optimisations delivered from the pilot test
work campaigns to date, footprinted against the PEA. The Interim Report will
evaluate the various product options currently available as revenue generators
for the project.

The Interim Report is expected to demonstrate the resilience of the project
economics in a variety of rare earth pricing scenarios and allow for the
commencement of the financing process for the project in parallel with the
completion of the separation work.  Despite the potential delay in
finalisation of the DFS, the Phalaborwa project development has been completed
in a short timeframe, and it is expected that the project will be ready for
development within five to six years of Rainbow securing the project rights in
December 2020.  This is a much shorter timeframe than would be expected for a
traditional mining project, which has an average development time of ca. 17
years according to the IEA.

As part of the financing process, offtake discussions have commenced with
industry participants, including original equipment manufacturers and global
trading companies, who share Rainbow's values and are looking to secure
responsible sources of all four critical magnet REE.

Longer term, Rainbow expects that the honing of its technology to recover
critical REE from phosphogypsum will allow the Company to access a much larger
addressable market in order to develop a long-term, scalable and sustainable
business. To this end, it is currently evaluating approaches for strategic
partnership opportunities in Saudi Arabia, Canada and India, along with the
MoU signed with Mosaic for the Uberaba project in Brazil and the partnership
with OCP S.A. ("OCP") and Mohammed VI Polytechnic University ("UM6P").

For further information, please contact:

 

 Rainbow Rare Earths Ltd   Company  George Bennett         +27 82 652 8526

                                    Pete Gardner
                           IR       Cathy Malins           +44 7876 796 629

                                                           cathym@rainbowrareearths.com
 Berenberg                 Broker   Matthew Armitt         +44 (0) 20 3207 7800

                                    Jennifer Lee

 Stifel                    Broker   Ashton Clanfield       +44 20 7710 7600

                                    Varun Talwar

 Tavistock Communications  PR/IR    Charles Vivian         +44 (0) 20 7920 3150

                                    Tara Vivian-Neal       rainbowrareearths@tavistock.co.uk

 

Notes to Editors:

About Rainbow:

Rainbow Rare Earths aims to be a forerunner in the establishment of an
independent and ethical supply chain of the rare earth elements that are
driving the green energy transition. It is doing this successfully via the
identification and development of secondary rare earth deposits that can be
brought into production quicker and at a lower cost than traditional hard rock
mining projects, with a focus on the permanent magnet rare earth elements
neodymium and praseodymium, dysprosium and terbium.

The Company is focused on the development of the Phalaborwa Rare Earths
Project in South Africa and the earlier stage Uberaba Project in Brazil. Both
projects entail the recovery of rare earths from phosphogypsum that occurs as
the by-product of phosphoric acid production, with the original source rock
for both deposits being a hardrock carbonatite.

The Phalaborwa Preliminary Economic Assessment has confirmed strong base line
economics for the project, which has a base case NPV10 of US$627 million, an
average EBITDA operating margin of 75% and a payback period of < two years.

More information is available at www.rainbowrareearths.com
(http://www.rainbowrareearths.com)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDBLGDCLUBDGSR